MITCHELL PRINCIPLES APPLIED IN TAX TRIBUNAL

In Mr and Mrs B -v- Revenue & Customs the First Tier tribunal (tax) considered whether the Mitchell principles applied to permissions to appeal out of time in the first-tier tribunal tax chamber.

“The law

42. There is no guidance in the statute on how the Tribunal should exercise its discretion. And both parties considered that any previous decisions on this issue were in effect superseded by the recent Upper Tribunal decision in McCarthy & Stone (Developments) Limited and others (PTA/345/2013) applying the Court of Appeal decision in Mitchell v News Group Newspapers Ltd[2013] EWCA Civ 1537.

43. The case concerned an application for permission to appeal to the Upper tribunal an FTT decision out of time. The Upper Tribunal referred to the new CPR 3.9 which provides:

“(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –

(a) for litigation to be conducted efficiently and at proportionate cost; and

(b) to enforce compliance with rules, practice directions and orders.”

44. The Upper Tribunal said, as have previous cases, that while the White Book does not govern proceedings in this Tribunal, nor in the Upper Tribunal, its principles are clearly to be respected.

“[45] The overriding objective does not require the time limits in those rules to be treated as flexible. I can see no reason why time limits in the UT Rules should be enforced any less rigidly than time limits in the CPR. In my view, the reasons given by the Court of Appeal in Mitchell for a stricter approach to time limits are as applicable to proceedings in the UT as to proceedings in courts subject to the CPR. I consider that the comments of the Court of Appeal in Mitchell on how the courts should apply the new approach to CPR 3.9 in practice are also useful guidance when deciding whether to grant an extension of time to a party who has failed to comply with a time limit in the UT Rules.

[46] The new CPR 3.9 does not contain a long list of factors to be considered as the old one did. The new version now provides that the court will consider all the circumstances of the case to enable it to deal justly with the application including the need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with rules, practice directions and orders.

[47] As the Court of Appeal recognised in Mitchell at [49], regard must still be had to all the circumstances of the case but the other circumstances should be given less weight than the two considerations which are specifically mentioned. In this case, applying the principles of the new CPR 3.9, as explained in Mitchell and Durrant, means that, in considering whether to grant relief from a sanction, I should take account of all the circumstances, including those listed in the old CPR 3.9, but I should give greater weight to the need for litigation to be conducted efficiently and the need to enforce compliance with the UT Rules, directions and orders.”

45. However, CPR 3.9 and the decision in McCarthy & Stone relates to breaches of court (or tribunal) rules. Here, there has been no breach of the Tribunal’s rules. The appellants have merely failed to bring their appeal within the statutory time limit and the Tribunal has discretion granted by statute to permit a late appeal. The legislation expressly contemplates the possibility that the time limit for appealing could be extended, although that is also true of the Tribunal’s rules. The question here is not whether the litigation is being conducted efficiently but whether the appellants are entitled to litigate at all.

46. However, these distinctions may be more apparent than real. Time limits, whether statutory or under court rules, are there for a reason. Extending time should be the exception rather than the norm.

47. So I accept that the need for time limits to be adhered to should be given significant weight. Other considerations remain relevant, however, as recognised in McCarthy & Stone (§46 and §47) and as stated by the Upper Tribunal in Data Select Ltd [2012] UKUT 187 (TCC). In that case the Judge said:

“[34] …..Applications for extensions of time limits of various kinds are commonplace and the approach to be adopted is well established. As a general rule, when a court or tribunal is asked to extend a relevant time limit, the court or tribunal asks itself the following questions: (1) what is the purpose of the time limit? (2) how long was the delay? (3) is there a good explanation for the delay? (4) what will be the consequences for the parties of an extension of time? and (5) what will be the consequences for the parties of a refusal to extend time. The court or tribunal then makes its decision in the light of the answers to those questions.

[37] In my judgment, the approach of considering the overriding objective and all the circumstances of the case, including the matters listed in CPR r 3.9, is the correct approach to adopt in relation to an application to extend time ….””

THE DECISION

The application to appeal out of time was refused.

“Conclusions

73. My starting point is that the time limit should be respected unless there are very good reasons not to: time limits are there for a reason. Parties, including HMRC, are entitled to finality.

74. While I note the delay was of six months, I consider the other matters of much greater importance.

75. The potential for damage to Mr B’s reputation and the very serious nature of any possible disciplinary proceedings which could be taken against Mr B by the SRA if the ‘deliberate inaccuracy’ penalty stands are the main factors in favour of giving permission to appeal out of time. If I do not grant permission to appeal the appellants will be unable to challenge the penalty. Against that, however, I find that the appellants are the authors of the situation in which they find themselves. Mr B failed to communicate their reservation about publication to HMRC: had he done so the appeal would not have been treated as settled and they could have made a timely appeal rather than now seek permission to appeal out of time. The failure by Mr B to mention his reservation in his letter of 25 October is very hard to understand or excuse bearing in mind it is clear that the matter of non-publication was critical to him and he knew HMRC had earlier refused to settle on terms which included non-publication and further that they had told him that they would not able to settle on such terms. Another matter which counts against giving permission is that the appellants were prepared to accept they were guilty of deliberate inaccuracy in their return: they only seek to resile on this because of the threat of publication.

76. Overall, and irrespective of the question of the contract settlement, I find in any event that consideration of all the other factors point more strongly to permission to appeal late not being granted. Time limits should ordinarily be adhered to. HMRC’s reasonable expectation that the matter was settled should be given effect to rather than the appellants’ unreasonable expectation that the settlement encompassed non-publication. I therefore refuse permission to appeal late.

77. Further, if I am right and the Tribunal has no jurisdiction to go behind the contract, then there would be no point in granting permission to appeal in any event. The matter is settled by contract.